The new government, which intends to privatize Albpetrol by 2016, values the company’s assets at Euro 95 million
TIRANA, Feb. 25 – The new Socialist Party-led government has reiterated its intention to privatize state-owned Albpetrol oil company which remains the biggest state-owned asset after major enterprises are already in private hands.
Albpetrol’s privatization was officially invalidated in early 2013 after a staggering Euro 850 million winning bid by an Albanian-led consortium proved fake.
Speaking in a meeting with Albpetrol staff last weekend, Energy Minister Damian Gjiknuri said Albpetrol’s privatization would not include exploration rights over new blocks.
“Government is closely monitoring the process, there was a failed, speculative and badly drafted privatization. It was a privatization which targeted selling the company with all exploration rights even on certain blocks, stripping the state of its sovereign rights. It is more normal that the company, if privatized, is put up for sale for its capacities, its licences and as a company focused on oil exploration and production. Rights on unexplored blocks should remain to the state and will be given to interested companies under competition,” said Gjiknuri.
The Energy and Industry Minister announced Albpetrol had contributed USD 5 million in dividend in the past four months, blaming the company’s previous poor financial performance on overstaff political appointments.
In its 2014-2016 economic and fiscal program, the Albanian government also plans to sell Albpetrol oil company after its failed privatization in 2012. The company’s assets are estimated at Euro 95 million.
What would have been Albania’s biggest ever strategic privatization and a boost to the country’s ailing economy in 2013 turned out a big failure. The Albanian government invalidated a record staggering bid worth Euro 850 million on the privatization of Albpetrol oil firm after the winning bidder, Albanian-led Vetro Energy consortium, failed to pay the financial guarantee leading to the finalization of the contract.
Government also failed to collect Euro 85 million in a bid guarantee over fake documents submitted by the bidder.
In a tender held on Sept 2012, U.S-based Vetro Silk Road Equity consortium outbid Canadian, Russian and Chinese potential buyers by offering 850 million euros, more than double the amount the Albanian government had been advised by its U.S based consultant Patton Boggs.
Only six bids were submitted in the Sept. 7 tender from an estimated 19 companies who had expressed interest to take over Albpetrol. Russian giant Gasprom which had been roumored as a favourite potential buyer submitted the lowest bid of Euro 40 million, but without a bid guarantee, automatically being disqualified.
Albpetrol currently runs only 5 percent of the oil wells, some 1,200, while the remaining overwhelming majority is managed by foreign companies on concession contracts. Ahead of its privatization, Albania’s Energy Regulatory Entity (ERE) had granted oil producer Albpetrol licences to transmit and distribute natural gas in an effort to increase interest from potential bidders and raise the company’s market value. ERE had also equipped Albpetrol as a qualified wholesale supplier of energy. The state owned giant has also been granted several exclusive oil exploration rights.
The Albanian government plans to sell off minority stakes in key enterprises and privatize key remaining strategic enterprises by 2016. In 2014-2016 economic and fiscal program government says it plans to collect of 172 million from strategic and non-strategic privatizations in the next three years.
The privatization list includes minority stakes in ARMO oil refiner and OSSH distribution operator (CEZ), and the sale of 100 percent of shares of the Albpetrol oil company. Government also plans to collect Euro 5 million from the sale of several small assets such as buildings or military facilities.
